While overall production is flattening out, individual shale play areas in the Rockies will continue to grow, making the region the main future natural gas source for the West, according to Ultra Petroleum Corp. marketing vice president Stuart Nance.

Nance spoke Tuesday at the opening of the LDC Forum: Rockies and the West conference in Los Angeles.

Traditional U.S. Southwest and Western Canada supply basins will continue to decline in their importance to supplying California and the rest of the West, Nance said. He focused on Ultra's main business area -- Wyoming -- as the nation's second largest natural gas producing state next to Texas, but Nance emphasized that shale gas has become the new conventional source nationally.

The challenge for the industry is to develop the demand to match the almost unlimited potential of shale, and in the process not to get production too far out in front of the demand curve, said Nance, citing U.S. shale production as going from 2 Bcf/d in January 2007 to 14 Bcf/d this past summer.

"The Rockies are going to be a much more significant part of the future of gas supplies, not only here in California but throughout the West," Nance said. "No disrespect to our friends from Canada, but my personal vision is that while the Rockies will play an ever-bigger role, the Canadian supplies will not play as prominent a role as they once did."

With the advent of El Paso Natural Gas Corp.'s Ruby Pipeline and the Kern River Gas Transmission expansion, Nance said there is going to be 3 Bcf/d capacity coming from the Rockies to the West, and increasingly more of that gas will find its way to California. "That's over 3 Bcf of high-pressure, very efficient gas transmission capacity from Wyoming to markets in the West," Nance said. "This is the future of gas supplies for the West."

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